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Catch-Up Provisions May Help You Invest More

If you are getting close to retirement but feel like you need to invest more, learn about the catch-up contribution provisions that may be available for your 401(k) and/or 457(b) deferred compensation plan.

Two ways to catch-up

There are two catch-up provisions that allow you to contribute more than the standard annual deferral limits if you are closer to retirement and eligible. Both are tax-deferred until withdrawal when they are taxed as ordinary income. You can only use one of these catch-up options per plan per year, so consider which would work best for your personal situation.

  • Age 50+ Catch-Up – In a tax year when you are 50 or older and are actively employed, you can defer up to $6,000 over the normal deferral limit to your 457(b).
  • Traditional 457(b) Catch-Up – If you are within the three years prior to your plan’s Normal Retirement Age, you may be eligible to make a one-time election to defer additional money into your retirement plan.

Normal Retirement Age is the age specified in your employer’s 457(b) plan and is typically the age you choose for the purpose of initiating your Traditional 457(b) Catch-Up election. You must:

  • Have the right to retire to receive full retirement benefits under your employer’s pension plan with no reduction for age or service
  • No later than age 70½

Get the help you need

Talk with a Retirement Specialist for more information on catch-up contributions for your deferred comp plan.

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NRW-3062CA-CA.1
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